Andhra Pradesh is set to emerge as a major producer of clean energy with as many as 22 solar power companies coming forward to set up their units in the state.

AP Industrial Infrastructure Corporation (APIIC), the nodal agency for infrastructure development in the state, has agreed to allot land to all the 22 companies, whose combined power generation capacity would be around 2,000 Mw.

"It has been agreed to allot an extent 22,000 acres of land to the 22 companies whose total investment will be to the tune of about Rs 30,000 crore," APIIC chairman and managing director, BR Meena, told Business Standard.

He said Anantapur, Kadapa, Mahabubnagar, Guntur and Adilabad districts in the state were found to be more suitable for solar power generation and APIIC was trying to acquire land for this purpose with the help of the respective district collectors.

Industry sources, however, said sale of power by independent power producers would be an issue due to high cost of power ( capital investment Rs 15 crore per Mw) and state-owned distribution company Transmission Corporation of Andhra Pradesh (APTransco)'s unwillingness to increase tariff rates for solar energy. According to the Central Electricity Regulatory Commission (CERC) guidelines, the tariff rate should be Rs 5.50 per unit but APTransco was unwilling to pay more than Rs 3.70 a unit.

In the absence of a suitable state policy, they said solar energy industry was unlikely to take off in the near future, though many investors were willing to set up solar based power plants.

Nevertheless, Meena said the state government was aggressively trying to promote solar power generation keeping in tune with the Jawaharlal Nehru National Solar Mission launched by Prime Minister, Manmohan Singh, last month. The National Solar Mission seeks to generate 20,000 Mw of electricity from solar energy by 2022.

The APIIC has earmarked 10,000 acres of land at Kadiri in Anantapur district for its Solar City, a first-of-its-kind solar farm cluster. An additional 10,000 acres is stated to be available at the place. This barren land has been surveyed by the Tata Energy and Resources Institute (Teri) and has been found to be suitable for setting up solar units.

At Solarcon India, an event on the solar and photovoltaic sector held in the state capital in November last year, four companies -- Sunborne Inc, Lanco Solar, AES Solar and Titan Energy- signed memoranda of understanding (MoUs) with the state government to set up units at Kadiri.

Under the MoUs, US-based Sunborne and AES Solar would be investing Rs 2,000 and Rs 600 crore respectively. Hyderabad-based Lanco Power would also be investing about Rs 600 crore.

Titan Energy Systems, a city-based module manufacturing and turnkey solar power plant EPC company, has formed a special purpose vehicle (SPV) in collaboration with global renewable energy developer, Enfinity N V of Belgium, for setting up a 1 Gw (1,000 Mw) of photovoltaic installations on 3,000 acres in Anantapur over a period of five years. APIIC has allocated the required land to Titan Energy on a long lease.

According to the arrangement, Enfinity will develop and finance the project while Titan will act as a contractor and supplier of PV modules. However, the company had kept this project on hold for the time being. It is waiting to see whether tariff rates will be increased as per CERC guidelines.

The state government has also signed an MoU with Fraunhofer Institute of Germany, a global research and development institute, to collaborate on new technologies, testing and certification, and training programmes on solar energy.

This apart, the state government has developed a Fab City, a notified special economic zone, over an area of 1,172 acres on the outskirts of Hyderabad where it has allotted land to 20 companies.

Of these, four companies – Solar Semiconductor, KSK Energy Venture Limited, XL Telecom and Energy Limited and Surana Ventures Limited -- have started operations. These companies have been allotted 160 acres of land and they would invest about Rs 6,532 crore ($1306.5 million) in phases over a period of 10 years.

In the first phase, Solar Semiconductor would manufacture solar cells and solar panel. In Phase II, it will enter into solar thin film technology and eventually scale up its manufacturing capacity to one giga watt per annum. The company would invest Rs 5,500 crore ($1,100 million) over a ten-year period. It has already sent its first export consignment worth Rs 2.2 crore to Germany.

KSK Energy Ventures, on the other hand, has set up a solar photovoltaic panel unit and has committed to invest Rs 351.25 crore ($ 70.25 million) in 50 acre. Similarly, XL Telecom, which has also been allotted 50 acre, has lined up Rs 381.25 crore ($76.25 million) for solar cells and modules and Surana Ventures would invest about Rs 175 crore for solar photovoltaic cell and modules.

According to former chairman of APIIC, BP Acharya, Fab City alone would generate 3 Gw (3,000 Mw) of solar power in the next 7-10 years. At least 7 out of the 20 companies, which had been allotted land at Fab City, will commence commercial operations in the next four years.

Meanwhile, the state government had resumed 78 acres out of the 100 acres allotted to SemIndia Fab Private Limited, an anchor unit at Fab City, for failing to fulfil its obligations in bringing investment and creating employment.